Title: Realtors feel the heat

Sub-title: A Competition Board conclusion that the Canadian Real Estate Association’s practices are anti-competitive could force major changes on the industry.


Pierre Olivier has been smiling a lot lately. The Quebec actuary recently inked a deal to sell his Ville de St-Leonard condominium. However since he sold the $185,000 property himself, Olivier also saved the $10,000 or so in fees that he would have paid a real estate agent.


“It went pretty well,” said Olivier, who got close to a dozen responses to an Internet ad that he placed. “I showed the condo to several people and got two offers. I finally accepted one, which is conditional on the buyer obtaining financing.” Olivier isn’t alone in bypassing Canada’s real estate agent industry. More than half of Quebecers do so, as do many Canadians.


The good news for those do-it-yourselfers is that their life could get a lot easier. In recent weeks, a Competition Bureau investigation into the Canadian Real Estate Association’s Multiple Listing Service, which accounts for a large majority of Canada’s real estate transactions, has been coming to a head. The two organizations are now in negotiations, which could eventually broaden the range of options available to FiSBO (For Sale by Owner) sellers, including easing their access to the MLS.


A long history of investigation into CREA and the MLS

Independent and discount home sellers that bypass the real estate agent industry have long had to do without access to the Multiple Listing Service, a vast web-site of properties for sale that shoppers across the country can consult, that significantly eases their searches.


However a Canadian Real Estate Association spokesperson denied rumors that the database would be opened to everyone. “Recent media reports have inaccurately reported that a proposed resolution would result in members of the public being able to grant access to the MLS to list their homes for sale without the involvement of a CREA member. This is incorrect,” said Alyson Fair.


That said, the Competition Bureau has had long running concerns with the way the Canadian Real Estate Organization members operate. As early as the 1980s, a bureau investigation uncovered clear-cut evidence of anti-competitive conduct by the real estate industry. These included attempts to standardize commission rates and splits, unreasonable restrictions on advertising, prohibitions against using incentives and un-warranted requirements for membership in the industry group.


By all indications, those anti-competitive practices continue even today. “We have complaints from realtors that CREA restrictions require consumers to pay for services that the do not want or need, so they can list their homes on MLS,” says Greg Scott, a Competition Bureau spokesperson. Scott refused to comment further on the specifics of the matter other than to say that it is standard practice for the bureau to work with organizations when there is a competition problem.


Good news for consumers and FiSBOs.

Any moves that broaden access to the MLS could also be good news for consumers, because these would almost certainly put pricing pressure on the country’s real estate agents, who many argue add far less value to real estate sales transactions in today’s Internet era, than they once did.


Reaction to the Competition Bureau’s investigation has been mixed. “CREA does not agree with the Commissioner’s conclusions, either as a matter of fact or of law,” said Fair, who confirmed that the two organizations were involved in ongoing settlement discussions. “That said, CREA has indicated its desire to be responsive to concerns expressed by the Competition Bureau (and has) determined that it will pursue a consensual resolution subject to member support.”


According to one industry veteran, the investigation is a lot of fuss about nothing. “I am all for free competition, but the MLS is not as crucial for home sellers as it once was,” says Robert Beaudoin, vice-president (sales) at real estate broker Proprio Direct. “With the advent of the Internet, there are so many free and/or inexpensive ways that sellers can advertise their property, that there is no one right solution for everyone.”


Negotiations between the Competition Board and Canadian Real Estate Association will almost certain broaden the options available to FiSBOs. Even if CREA refuses to buckle down and allow do-it-yourselfers direct access to the MLS, the listing fees will almost certainly come down. FiSBOs could may also eventually able to access the MLS indirectly, by using a discount broker.


Current negotiations will almost certainly culminate too late to help Pierre Olivier with his condo sale. That said, he vows to follow developments closely. “You never know,” said Olivier. “I may want to sell another property at some point. The more options I have, the easier it will be.”




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